It's always pleasant when one of our stocks pays us rather than the other way around. Such is the case with vaccine and antibody company Emergent BioSolutions (NYSE:EBS), which closed Friday more than 4% higher after it announced it would open its wallet to buy shares of its own equity.
Emergent BioSolutions is launching a fresh share-buyback program under which management is authorized to repurchase as much as $250 million worth of its common stock. This new initiative has a one-year duration ending on Nov. 11, 2022.
The company can certainly afford it. As of Sept. 30, it held cash and cash equivalents totaling nearly $404 million. It does not currently pay a dividend, a common source of fund outflows for big companies.
Emergent BioSolutions clearly feels it has the financial muscle to make these buys while spending capital to expand its business. The company quoted CEO Robert Kramer as saying of the new share repurchase plan:
This announcement demonstrates our confidence in Emergent's business and the strength of our balance sheet and cash position, providing the flexibility to implement this program while simultaneously pursuing opportunities to invest and grow the business both organically and through potential acquisitions.
Cash and equivalents holdings aside, $250 million over the course of one year is rather modest by Emergent's standards. In 2020, the company earned nearly $1.6 billion in revenue while booking a $305 million net profit.
Although it's debatable whether any company's precious financial resources are best served buying its own stock, Emergent investors obviously believe this is a clever move that will boost the market's confidence in the company.